introduction to macro economics section 6 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (a)

Primarily there are three methods of measuring national income. The methods are product method, income method and expenditure method.

Product method is given by Dr Alfred Marshall, income method by A.C. Pigou and expenditure method by Dr Irving Fisher.

The ‘Investment Method’ is used for trading properties where evidence of rates is slight, such as hotels, cinema, car parks and etc.

Answer: (d)

Saving function is a mathematical relation between saving and income by the household sector.

This function captures the saving-income relation, the flip side of the consumption-income relation that forms one of the key building blocks for Keynesian economics.

Answer: (d)

Disapproval of Policy Cut seeks to reduce the amount of the demand be reduced to Re.1/-’ representing disapproval of the policy underlying the demand.

A member giving notice of such a motion shall indicate in precise terms the particulars of the policy which he proposes to discuss. The discussion shall be confined to the specific point or points mentioned in the notice and it shall be open to members to advocate an alternative policy.

Answer: (c)

Deficient demand refers to the situation when aggregate demand for goods and services falls short of aggregate supply of output which is produced by fully employing the given resources of the economy. This deficient demand leads to the decrease in output, employ-ment and prices in the econo-my.

According to Malthus, deficiency of demand could lead to stagnation in which both capital and labor are redundant relative to the opportunities for employing them profitably.

Answer: (c)

National income is the total value a country’s final output of all new goods and services produced in one year. Understanding how national income is created is the starting point for macroeconomics.